Aga Rangemaster - famous for its upmarket cookers - has seen its long spell of weak trading continue. The problem is that demand is substantially driven by housing market activity, which continues to flatline. Add that to a painful pension deficit and the shares look up with events.
Adjust for property gains and half-year operating profit slumped 29 per cent year on year to £1.5m. And while the group's classic Aga and Fired Earth offerings performed well - volumes rose 4 per cent and 7 per cent, respectively - that was offset by a 1 per cent volume fall for Rangemasters and especially weak Irish trading conditions. Overseas markets, where Aga generates 37 per cent of revenue, are hardly booming either. The group made some progress in France and is trying to break into China through an agreement with Chinese group Vatti, but conditions in North America were described as "patchy".
The pension funding deficit, estimated by analysts at around £200m, is a worry, too - which explains the decision to axe the dividend. Management has agreed with the pension fund's trustee to contribute £16m this year, followed by £4m in 2015, then £10m a year until 2021, with a final £30m payment.
Numis Securities expects full-year adjusted EPS of 7.4p (6.9p for 2011).
AGA RANGEMASTER (AGA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 59p | MARKET VALUE: | £41m | |
| TOUCH: | 58-60p | 12-MONTH HIGH: | 97p | LOW: 55p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 4 | |
| NET ASSET VALUE: | 177p* | NET CASH: | £11.9m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 121 | 4.2 | 4.30 | 0.80 |
| 2012 | 119 | 1.6 | 1.90 | nil |
| % change | -2 | -62 | -56 | -100 |
*Includes intangible assets of £89.3m, or 129p a share | ||||
